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There are different factors that determine the increase in your salary.

Job performance is a major factor in any pay raise decision, other factors may be considered as well:


The employer’s overall financial situation.

The department’s or division’s “budget” for raises.

The employee’s length of service.

The employee’s qualifications (i.e., the scarcity of certain talents in the labor market and the likelihood that the employee will be paid more for them elsewhere).

How much other employers in the local area are paying for similar jobs. Employers sometimes look to wage surveys of similar organizations within their labor market area for guidance in setting or adjusting wage rates. Most employers use “pay budget” surveys rather than compensation surveys when comparing their annual increases to those of other employers.

What the employee requires in the way of incentives.

General economic conditions–the inflation rate, changes in the cost of living, etc. Increases in the cost of living should be a major consideration when deciding on a budget for pay raises. The primary tool for measuring the cost of living is the Consumer Price Index (CPI), which is issued each month by the U.S. Bureau of Labor Statistics. Some organizations have an “escalator plan,” which grants employees across-the-board increases in proportion to 

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